Global stock markets stumble on China tariff fears

The US economy is churning out surprising job numbers month after month

World equities stumbled Friday on worries over the US-China trade war that were amplified by a threat of fresh tariffs by President Donald Trump.

Trump jolted markets at midday by renewing threats to impose levies on all US imports of Chinese goods. Washington has already slapped duties on $50 billion in Chinese goods and plans are underway for tariffs on another $200 billion.

But Trump told reporters on Air Force One that "there's another $267 billion ready to go on short notice if I want."

That would cover about 100 percent of the goods the United States imports from the world's second largest economy.

Some US stocks were in positive territory part of the morning but indices fell to session lows following Trump's remarks. The major indices later cut their losses, but still finished in the red.

"This trade tactic is turning into more of a policy and it's disturbing the markets," said Jack Ablin of Cresset Wealth Advisors.

"Investors also hold their breath because, as China imports less than the US, they could take steps on other parts of the economy, like US Treasuries or restrictions on US companies for example."

"If there were dramatic worries (about the trade war) you would see the market down even more, but it isn't," said Quincy Krosby, chief market strategist at Prudential Financial.

"The major question would be: is the US economy strong enough to absorb these rates?"

Earlier, London closed lower, underperforming its peers thanks to a strong pound, while Frankfurt and Paris managed to recover late in the session, closing flat and slightly lower, respectively.

- Worst start possible -

Markets have suffered heady losses in the first week of September, as investors worry over contagion from the ongoing emerging markets crisis -- and the US-China trade spat.

"There were no signs of an end of the week recovery, with September getting off to the worst start possible for the European indices," said Spreadex analyst Connor Campbell.

"Alongside the general market malaise -- informed by the potential escalation of the US-China trade war and the sorry state of the emerging markets -- the FTSE has been hampered by the pound's recent performance, with the currency rising following signs of a Brexit breakthrough."

Among individual companies, Tesla Motors fell 6.3 percent after a pair of executive departures added to uncertainty surrounding the electric car maker a day after chief executive Elon Musk appeared in an interview smoking marijuana.